Treading water before learning to swim..

seriouslyunsurprising

*takes deep breath* Hi everyone, this diary has been a long time coming.
I had my lightbulb moment last week, after months of burying my head in the sand. After the Chancellor's Budget announcement I realised I needed to take stock and come up with a plan for our finances, so here I am!

I'm in my early 30s, have 3 children, run my own business, husband is employed & earns a good wage. We have two car loans and a couple of other 0% finance deals which are related to home improvements. Making minimum payments on all debts (not including overdraft) amounts to £1940 per month, which we can just about manage. A few of the loans are paid directly from the business bank account, so don't impact on our personal monthly budget. I am on statutory maternity at the moment, and our net household income is £3242. I've put together a monthly budget which allocates £400/month to groceries and £150/month to fuel costs, but hoping to come under these figures. After all bills, loan payments, etc and those allowances for food & fuel we are short £250/month. BUT if I can turn things around a bit with the business I should be able to add this amount on top of my SMP each month from the business account.

We've found ourselves in this position due to my business having financial difficulties - financial year 19/20 involved a lot of investment into my business, via personal loans in both our names. The business was doing brilliantly and forecast to continue doing so, however due to Covid we have suffered a 50% decrease in turnover in financial year 20/21, and had to close completely for some months. We've been able to use the furlough scheme and have taken out a BBL but otherwise have not qualified for Govt support so have had to get more credit to keep the business afloat... things are now looking up but we have a significant debt carrying over from Covid. I have looked at the figures and don't think it warrants bankruptcy at this point in time, and I am hopeful that with some severe belt tightening we will be able to service all the debts, and hopefully repay them all in full eventually. I'm not sure how to work out our Debt Free Day though, can anyone help please?

Debts as at 12.03.21 are as follows:
CC1 £7538 - £1659 at 3.95% to 13.03.22, the rest at 20.93%
CC2 £5878 at 0% until 17.06.21, then 22.93%
CC3 £4110 at 0% until 01.05.21, then 17%
CC4 £4010 - £1755 at 0% to 10.06.21, the rest at 21.66%
CC5 £5413 at 0% to 15.08.21, then 19%
CC6 £776 at 0% to 07.10.21, then 30%
Paypal Credit £1924 at 20%
Admiral Loan 1 £3128 at 3.45%, paying £178.78/month, repaid 17.07.22
Admiral Loan 2 £4689 at 14.15%, paying £187.20/month, repaid 18.07.23
VM Loan £12215 at 3.6%, paying £314.55/month, repaid 09.08.24
Safestyle Loan 1 £1666.69 at 0%, paying £111.11/month, repaid 12.07.22 (due to 3 month payment holiday)
Safestyle Loan 2 £143.68 at 0%, paying £47.92/month, repaid 20.09.21 (due to 3 month payment holiday)
Hitachi Finance Loan £278 at 0%, paying £39.85/month, repaid 13.21.21 (due to 3 month payment holiday)
Motonovo PCP Loan £14368 at 7.08%, finishes 30.05.23
Santander Car Loan £6571 at 8%, repaid 25.08.25
Natwest Overdraft £1945 at 33.75%
TOTAL OUTSTANDING: £74,653.40 at 12.03.21

It makes me feel physically sick to see the total figure. I never in a million years thought we would be in this position, and if it weren't for Covid things would be a lot more positive. I am hopeful that with some focus and willpower we will continue to service the debts and eventually repay everything, although there is a long road ahead!
My goal is to meet the minimum payments and then anything we have beyond that will be thrown at the overdraft as it's the highest interest rate. As some of the fixed term debts start to drop off, I can use that money towards the overdraft each month and eventually be able to do the avalanche method. I should be able to take a better wage from the business in autumn too, if I manage to turn things around after Covid. Any additional income will then be chucked at the debt too.

Since my LBM last week I have reshuffled some of the debts around, and closed one card which was on 29% interest, by balance transferring it to a lower interest rate card. We have opened a joint Monzo account which will have the £550/month allowance for fuel and groceries in it, hopefully allowing us to keep a closer eye on this and revise the budget/make savings as we go.

If anyone's got this far, thank you! I really want to keep myself motivated and accountable, so will be posting as often as I can. x

Four_Seasons

Hi, I have subscribed to your diary and am cheering you on!  I am much older and not in debt (but have been!!) following the lovely folk on here helps keep my spending in check, you can do it x

joedenise

Well done on the LBM and posting here.  It's probably the hardest step to admit you have lots of debt.  Sounds as though things will be better once your business picks up a bit.

In the meantime could you do some EBay or Gumtree selling to raise some funds or do some surveys to try and raise a bit more money?

dreambig19

Hi, well done on getting it all written down! I found as awful as it was to see my figures in black and white, it also lifted a weight as I was finally able to take full accountability, and couldn't avoid the figures any more.
I'm sorry to see Covid had such an impact on you. I would imagine a lot of people are in the same position, it really is awful.

I'll be here to cheer you on along your journey! Looking forward to sharing it with you.

Bizzywizard

Hi,
You haven't put your SOA up, so that helps others comment.
A couple of things I did helped me straight away after reading Matins tips.
Council tax - I now have spread over 12 months not the normal 10 (just call them up) - this has helped as I pay roughly the same amount each month.
I have an excel spreadsheet showing everything that comes in and out down to the last penny. I also check my bank account against by spread sheet each night....I never used to!
Do you sell items on ebay/market place? Do you do survey sites? Panelbase is about £10/15 a month Populus £50 every 7 months or so (for me). But worth doing! Every month I would bank the £15 and it would go straight off the debt.
Have you tried switching bank accounts? I switched to Nationwide flex account it gave me a 0% overdraft for £2k for ONE YEAR ONLY. It was our HSBC overdraft interest 44% (2) that was killing us, so the Nationwide one saved us! You could put your Natwest OD monies into (switch) it so your £1945 divide by 12 months = £162.08 a month - this would clear this money in the 0% period. I believe you need to be accepted for this bank account.
You could also open a new bank account (not switching) but put your wages into that account, say a joint account with NO OVERDRAFT and pay your standard bills out of it. This made me feel like I had some money and I could then see a future.
Cancel all, netflicks, amazon prime. disney plus (if you have these).
I had one year where we bought no booze ( we are not be drinkers anyway) this saved us about £20 a month.
I don't know how to work out your debt free day, but always start with the highest APR 1st to overdraft the paypal.
Hope this helps in a small way. The above are just some ideas for you to think about.
Bizzy

Honeysucklelou2

Well done on writing the first post. Sorry to read that your business has been so badly affected by Covid.

I use a combination of notebooks and a debt manager app. The app allows you to list your debts,  the APR and the minimum payments and gives you a debt free day for each loan and an overall debt free day. It also allows you to record one off extra payments, so always fun to see how much an extra payment impacts the debt free day!

All the best with the debt free journey.

seriouslyunsurprising

Thanks so much to everyone for your posts! It's really encouraging to have some support. Things are going well so far, I've always been a MSE-er so our outgoings have always been as low as possible, with the exception of groceries spending and Amazon purchases. Those two areas have been totally stripped back, as it's laziness/lockdown boredom that's caused them to get so out of hand. Now I'm on a bit of a mission I know I can cut back and ensure we don't overspend.
I am quite good at getting rid of stuff on Facebook/eBay, having three children means there's always a need for new clothes and historically I've been quite good at selling their outgrown clothes to raise funds to buy the next sizes up. I've got a massive pile of stuff I need to sell, just no time/energy to do it in at the moment. My youngest is only a few weeks old, so all my time/energy and resourceful-ness is going into him and keeping the elder two fed, dressed and happy! Hopefully once we're able to see family etc after lockdown ends I will be able to snatch some time to get some stuff listed.

In the meantime I'm pretty pleased with myself - managed to cash in some of my Quidco cashback in the form of Amazon vouchers which has paid for my son's birthday presents! It's his birthday in a few weeks and we just didn't have any funds to pay for anything. I'm also on a bit of a Spring clean at the moment and am finding cash in all sorts of places, every little helps! Less positive news on the business side of things - one of our vehicles needs a fair whack spending on it to keep it roadworthy, so this means I won't be able to pay any of our PAYE debt back to HMRC this month. It's so frustrating but having looked at all our options it's an essential expense.

@Bizzywizard thank you for the tips! We pay for Netflix but thankfully the in-laws paid for Disney+ as a gift last year, and have done the same now it's renewed. For the sake of £5.99/month I can't see the benefit of cancelling Netflix - it's one of our 'essentials' at the moment with the kids and us all bored at home! The account with the overdraft is actually an old student account of mine which I never really use anymore anyway - I just kept it for emergencies as the £2k overdraft came in handy historically if something happened and we couldn't get our savings out in time to pay for it (burst pipe, MOT bill, new boiler etc!) Unfortunately because of the lack of cash flow with my business, I had to use the whole lot to help afford my staff wages quite early on in lockdown last year, and it's been sat accruing interest ever since. We have a few other current accounts with different banks but none are willing to provide an overdraft facility (which is probably a good thing all things considered!)  I have looked into doing surveys but unsure how much time it would take to earn the amounts you've mentioned? I used to do a lot of surveys back in my student days but the compensation for them these days seems to be much less!
@Honeysucklelou2 Thank you! Do you happen to have the name of the app you mentioned? It sounds like it's just what I'm looking for!

ladyholly

I know you said you aren't eligible for government grants but I understand council also have money for grants or loans with different criteria. I am not sure which but It might be worth investigating. 

seriouslyunsurprising

ladyholly said:

I know you said you aren't eligible for government grants but I understand council also have money for grants or loans with different criteria. I am not sure which but It might be worth investigating. 

Thank you for this - we have applied for the grants we're eligible for locally. We've been rejected for all but one application which I made a couple of weeks ago. Crossing my fingers for that one but not optimistic!

elbree

Hi @seriouslyunsurprising 👋 congrats on your new diary and taking the huge first step of writing it all down in one place. So sorry that Covid has affected your business and frankly you sound like superwoman saving a business, looking after two kids and a tiny baby! I could barely wash my hair when mine was 2 weeks old! Have you trawled around for any business rates discounts or tax rebates you are owed? Agreed that cancelling Netflix is pointless as it's a lifeline with kids in a pandemic! Have you got any emergency fund? Also on groceries maybe investigate any loyalty cards you're not currently using. I often build up a grocery fund there for the ends of the months when I'm low on money. 

Siberianski

@seriouslyunsurprising
You need to be realistic here with 18 years of experience in the banking sector including now collections work you will be surprised how many people are in debt for thousands. I see clients who still think paying 120 quid pm month for virgin media or sky is acceptable  or that think not switching utility providers is a good idea it all needs to be done unless you have a sizeable disposable income that can be put off the debts. Little cuts @seriouslyunsurprising

re surveys try these two apps ask anyone on here lol that knows me well (I am Scott_Weiland trying to sort my user name) i made i think it was back in 2016-2017 1500quid in a year off survey sites.
re apps try Qmee is a good one
also another good one is curious cat both are apps both pay out via paypal

re actual survey sites the best one is Prolific Academic and Opinium Research is another good one